When you hire a new accountant for your business, you will typically agree an upfront fee to cover the wide array of tax and administrative tasks required to keep your books in order. Here we consider the typical tasks an accountant will provide.
The tax affairs of sole traders are significantly more simple than those of limited companies – your tax bill will be calculated via the annual Self Assessment process, as your tax affairs and those of your business are counted as one entity.
For limited companies, the tax affairs of the company and its owners are distinct. As a company director, you will need to produce accounts for your company, and also fill in an annual Self Assessment return to account for your personal income.
Here we consider the typical tasks an accountant will carry out on behalf of a small limited company:
Typical limited company accountant duties
- Formation of your limited company (if you don’t have one). They may charge for this service
- Setting up a business bank account (optional)
- Registering your limited company for VAT
- PAYE (Pay-as-you-earn) registration
- Monthly book-keeping (with online accounting, you may prefer to do this yourself and save extra fees)
- Payroll administration
- Calculating your quarterly VAT liabilities
- Quarterly management accounts
- Year end company accounts
- Completing PAYE returns (P35, P14, P11d)
- Filing your company Annual Return (AR01) with Companies House
- Filling your company Corporation Tax return (CT600)
- Dealing with the authorities on an ongoing basis (HMRC, Companies House)
- Dividend planning advice
- Provide references for mortgages, lettings, other services.
Although the core duties are common across service providers, what’s included in your accountancy package will vary (sometimes significantly) between providers, so make sure you know exactly what is included before signing up.
Issues to consider when appointing an accountant
Your accountant may also complete your annual self assessment (personal tax), although this is often a chargeable extra, as this cost cannot be reclaimed against your Corporation Tax bill as it is a personal expense.
If you have more than one employee (yourself) in your limited company, or have additional tax issues to deal with, you should ask any prospective accountancy provider for a quote.
The amount of transactions you record, the type of industry you are in, the size of your business, and the complexity of your accounts will all influence the complexity of accounting you need, and therefore the cost.
Given the rapid growth in online accountancy services, you may decide to undertake many aspects of your accounts yourself, such recording details of all transactions, and working out your quarterly VAT liabilities. This is more likely to be an option if you are running a small limited company, and you don’t have very complex accounts.
Make sure you have a written statement containing all the tasks your accountant has agreed to undertake, the tasks you are obliged to undertake each month/annually, and the cost for the service.